Telstar Communications is going to purchase an asset for $800,000 that will produce $390,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12-12. (This represents four years of depreciation based on the half-year convention.)
The firm is in a 36 percent tax bracket. Fill in the schedule below for the next four years.
(Input all amounts as positive values. Round your answers to the nearest whole dollar amount.)
Year 1 Year 2 Year 3 Year 4
Earnings before depreciation and taxes
Depreciation Earnings before taxes
Taxes Earnings after taxes
Depreciation Cash flow